Radian (RDN) fourth-quarter net income soared to $428.3 million, or $1.78 per diluted share, up from a net income of $36.4 million, or $0.21 per diluted share, for the same quarter a year ago.
This beat analyst revenue expectations by $70.96 million.
“We made significant progress in 2014 with full year profitability and by reducing Radians overall risk profile,” said CEO S.A. Ibrahim. “By focusing on our core strengths in mortgage insurance and mortgage and real estate services, we are driving long-term value from our existing and growing portfolio while diversifying our future revenue sources.”
Earnings included two significant details:
- A net loss on discontinued operations of $449.7 million, or $1.85 per diluted share, which includes the loss on sale of Radian Asset Assurance Inc., Radians financial guaranty insurance subsidiary. Operations for Radian Asset for all periods have been reported as discontinued operations.
- The reversal of substantially all of the company’s deferred tax asset valuation allowance, in the amount of $815.6 million, or $3.36 per diluted share, in the fourth quarter of 2014. The DTA valuation allowance reversal, which represented $4.27 in book value per share as of December 31, 2014, is the result of Radians sustained profitability in recent quarters as well as the positive outlook for future profitability, driven by the reduction in the company’s legacy exposure and the improved composition of the overall portfolio.
For the full year, net income hit $959.5 million, or $4.16 per diluted share, which included a net loss after tax of $300.1 million from discontinued operations and an income tax benefit of $852.4 million from continuing operations, which was primarily driven by the reversal of the DTA valuation allowance.
This compares to a net loss for the full year 2013 of $197 million, or $1.18 per diluted share, which included an after-tax loss of $55.1 million from discontinued operations and an income tax benefit of $31.5 million from continuing operations.
“As we look to 2015 and beyond, we believe the combination of our mortgage insurance and mortgage and real estate services platforms will better enable us to sharpen our customer focus and provide a variety of services to meet their needs. This directly aligns with our strategy to serve the entire mortgage finance market and to be well positioned to compete in the next phase of the evolving housing finance market,” said Ibrahim.